SMM, April 23:
Macro Perspective
Fed nominee Kevin Warsh has pledged to safeguard monetary policy independence. The temporary U.S.-Iran ceasefire was set to expire on April 22. Trump initially said an extension was “extremely unlikely,” but later announced on Tuesday (local time) that the ceasefire would be extended, maintaining the naval blockade while awaiting Iran’s unified negotiation proposal. With U.S.-Iran talks volatile, macro sentiment is mixed this week.
Fundamentals
Overseas markets remain roiled by geopolitical disruption. Navigation in the Strait of Hormuz has yet to fully normalize. Combined with ongoing output cuts at Middle East aluminum smelters, the global aluminum supply deficit has widened, leaving a notable overseas supply-demand gap. This week, the LME aluminum 0–3 month contango structure continued to recover, with the premium rising to USD 57.07/ton. Meanwhile, LME aluminum inventories kept declining to a low of 378,800 tons, strongly supporting overseas prices.
Domestically, operating rates at downstream fabricators eased this week. Elevated aluminum prices have dented buying interest, while some aluminum ingots remain warehoused in Wuxi, creating visible inventory pressure. Domestic social inventories of aluminum ingots rose by 12,000 tons week-on-week to a high of 1.465 million tons. Whether an inventory inflection point emerges as expected requires continued monitoring.
Outlook
Middle East negotiations remain bumpy, with geopolitical risks not fully resolved. However, a widening overseas supply deficit and steady LME inventory destocking are keeping external aluminum prices firm. Domestic social inventories are still elevated, so the strength of demand recovery and the pace of inventory drawdown will be key drivers for the domestic market. Next week, the Shanghai aluminum contract is expected to trade in a range of RMB 24,700–25,300/ton, and LME aluminum between USD 3,500–3,700/ton.
